Published on:

by

I have written several times about the finality of Arbitration decisions, and haw they cannot be overturned even if the Arbitrator did not follow the law, or ignored the facts. Also discussed here has been the plight of the unlicensed contractor, and how he is not entitled to be paid, and has the give the money back, no matter how much work he did or how much he spent on the project. In both cases, parties should be sure to understand their situation, and may want to consult with a Sacramento and Yolo real estate and construction attorney. Both issues came together recently in a case were the arbitrator did not require the unlicensed contractor to disgorge his compensation. The court said the Arbitration Award was invalid.

arbitration award sacramento attorney.jpgIn Mouris Ahdout v. Majid Hekmatjah et.al., A Family Limited Partnership and Braum were the sole members and owners of a LLC. They formed the LLC to develop and sell a condominium project on property the had owned. The LLC Operating Agreement specified that the LLC would enter an agreement with BIDI (Braum Investment & Development, Inc.), general contractor, to execute contracts and purchase orders to develop the project. Braum, member of the LLC, owned BIDI. Braum was also designated the manager of the LLC. BIDI did not have a Class B Contractor’s License, required under California law to build a commercial building.

The LLC operating agreement also said that BIDI was not to get any fees for acting as general contractor. However, the profit-sharing allocations under the Operating Agreement gave Braum an additional 25 percent allocation, so BIDI was actually getting paid for acting as general contractor.

Continue reading
Published on:

by

California Courts sometimes reserve jurisdiction over parties or an action after the case has gone to final judgment, for various reasons. Jurisdiction is generally the power to hear and determine the claims of the parties. Some examples of court’s holding on to jurisdiction are to to enforce settlement in an action at the request of parties; or to determine the distribution of a fund of money deposited in court; and to make such other and further orders and decrees as might be deemed proper to carry out the judgment. In fact, there is a specific procedure to have the court reserve jurisdiction to enforce a settlement agreement. Where parties reach a settlement agreement that requires one or both parties to perform some acts that will not be complete within 45 days, they can file a “Notice of Conditional Settlement” per Rules of Court Rule 3.1385. In the Notice, they give the Court a date certain that the suit will be dismissed. Until then, the case becomes inactive, and off the court calendar, but still the court has jurisdiction to enforce the terms of the settlement agreement until the dismissal date.

sacramento real estate attorney option.jpgHowever, there is a limit to how long the court may keep jurisdiction over the parties. In Stump’s Market, Inc., v. Plaza De Santa Fe Limited, LLC, Stumps had rented space for a grocery store in a shopping center from Plaza. The relationship had lasted several years. They negotiated a modification granting Stump five additional five-year options. The rent included a calculation of the percentage of sales (percentage rent). There was some water damage in the parking garage below Stumps grocery store. Plaza said it was caused by condensation from Stump’s freezer. Stump disagreed, claiming that it was due to a leak that Stump had informed Plaza about.

They did not agree on what caused the damage, but they agreed that Stump would go ahead and repair the damage. They apparently did not agree (at least in writing) if, and how, they would split the cost. They got into a dispute as to paying for the repairs, calculating percentage rent, and Stump’s exercise of the next option. The lawsuit ensued.

Continue reading
Published on:

by

Homeowners associations in common interest developments have the ability to conduct a non-judicial foreclosure to collect delinquent assessment fees. However, the law places numerous restrictions on the association’s ability to foreclose to collect assessments. One of those restrictions is in provided the homeowner a right of redemption. I have written before about the right of redemption that exists with judicial foreclosure- a process in which the lender files a lawsuit for a court supervised foreclosure. In that situation, after the foreclosure sale, the borrower has a right for a period of time to redeem the property- pay the full amount of the debt owed, and get the property back. This right does not generally exist in nonjudicial sales, in which a trustee sells the property, usually outside the courthouse. However, in a common interested development, the foreclosed owner has a 90 day right of redemption. The owner can deposit the redemption price with the officer who conducted the foreclosure sale before the expiration of the redemption period. Owners in this situation should consult a Sacramento real estate and owners association attorney to be sure of their rights.

Yolo real estate attorney foreclosure.jpgCivil Code section 1367.4 prohibits a homeowners association from foreclosing to collect assessments totaling less that $1,800 (not including fees and costs). If it totals $1,800 or more, they can foreclose if they do the following:

1. Offer the owner to participate in alternative dispute resolution;

Continue reading
Published on:

by

It is well established that California real property owners have duties toward guests and people they invite to the property to let them know about concealed dangerous conditions. Even a foreclosing lender who takes possession of a house has a duty to disclose what they should know about, and the agent and owner are each deemed to know everything that the other knows. And, the owner’s broker has an equal duty of disclosure. Sacramento and El Dorado real estate attorneys, when asked what needs to be disclosed, usually say everything- if it was material enough for you to ask me, it was important to disclose. In a recent decision a lender who took the property after foreclosure, and their broker, were surprised to learn that, because they might have known about a possible danger, they might end up liable for a potential buyer’s injury.

broker duty disclose sacramento attorney.jpgIn Pindra Hall v. Aurora Loan Services LLC, Hall was a real estate agent showing a home for sale in Lafayette to a client. The house was owned by Aurora Loan Services, who took it back in a foreclosure. The property has a finished attic, which was accessed by pull-down stairway ladder. It was hinged; when it was raised, it folded, and went up into the attic opening as the opening was closed.

Aurora, the owner after foreclosure, had the house inspected by a contractor. The contractor provided a report listing more than 50 items under the heading “Health and Safety Required Repairs-Group 1.” Buried in that list was “Stair-Remove and replace attic stair.” The report was delivered to Aurora, and the listing agent read it. The report was left on the kitchen counter for visiting agents and potential buyers to review.

Continue reading
Published on:

by

It is a rule of California real estate that whenever a greater estate and a lesser estate in the same parcel of real property are held by the same person, without an intermediate interest or estate, the lesser estate generally merges into the greater estate and is extinguished. A greater estate is the greater interest in land. For example, for an easement, the real property that has the right of easement is greater; the property that the easement is subject to is the lesser. Also, a tenant holds a lesser estate; the landlord holds the greater estate. If the landlord transfer the property to the tenant, the lease is extinguished because the greater and the lesser are merged in one person. While merger is an ancient legal rule, Sacramento and Yolo real estate attorneys do not often encounter merger issues. However, in a recent decision from Southern California a plaintiff was disappointed that there was no merger.

sacramento real estate attorney merger.jpgIn Hamilton Court LLC v East Olympic L.P., a lot on a city block in Los Angeles was owned by East Olympic. However, East Olympic’s yard and encroached on the lot owned by Angelus. The parties reached an agreement in which Angelus granted an exclusive easement to East Olympic, which gave East Olympic the right to keep the yard and shed where they were. Angelus then sold its property to a partnership of A & B. East Olympic sold its property to a partnership of A and C. In the sale to A and C, East Olympic took back a deed of trust secured by the property PLUS the easement over the former Angelus property.

Partner C then conveyed its interest in the East Olympic property to B. That meant that A and B owned both lots simultaneously. A and B stopped making payments on the note to East Olympic. East Olympic then foreclosed the deed of trust, which was secured by the property plus the easement.

Continue reading
Published on:

by

California real estate transactions usually have provisions requiring that the parties arbitrate any dispute, rather than file a lawsuit. Sometimes they file suit anyway, and an opponent in the real estate contract dispute makes a motion to the court to order the parties to arbitrate, rather than litigate. The Code of Civil Procedure (1281.2) generally requires the court to order arbitration if there is a binding agreement to do so. However, there is an exception when:

“A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”

sacramento real estate arbitration.jpgQuestions of conflicting rulings are occasionally seen by Sacramento & Yolo real estate attorneys. Some defendants in a real estate lawsuit in Southern California were surprised recently when the court refused to compel arbitration. In Gohar Barsegian v. Kessler & Kessler, Barsegian was the buyer of a $3.7 million dollar property. A dispute arose, and the buyer sued her attorney and the seller. In a switch from the usual facts, The buyer’s contact with the attorney contained an arbitration provision; the seller was not a party to that agreement. Apparently there was not such a provision in the real estate contract. The complaint claimed that the seller recommended the attorney to the buyer, and that the seller and attorney had a longstanding relationship, and the attorney was secretly representing the seller as well as the buyer.

Continue reading
Published on:

by

The business judgment rule is a policy under California law which protects directors of corporations in certain circumstances. It contains two parts. The first part is statutory, which protects directors from personal liability if they act, in good faith, in a manner such director believes to be in the best interests of the corporation and its shareholders and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

The conditions are that-

(b) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by any of the following:

Continue reading
Published on:

by

Tender

California law requires a plaintiff asking the court to set aside a foreclosure to offer to pay the full debt (called a “tender”). The general rule is that a plaintiff may not challenge the propriety of a foreclosure sale without offering to repay what they borrowed. The idea is that if the plaintiff could not had redeemed the property if the sale procedure had not been defective, any of the irregularities in the sale did not result in damage to the plaintiff. There are exceptions to the tender requirement–

a) being fraudulently induced into taking the loan;

Continue reading
Published on:

by

Many California real property owners have challenged lenders foreclosure proceedings based on state and federal laws enacted the past few years to help homeowners during the real estate collapse.. In most cases, the courts have found that the laws do not create new, enforceable rights, with a few exceptions. Mis-interpretation of requirements placed on lenders, through statutes and language of the deed of trust could be perilous, and interested parties should consult with an experienced Sacramento & Yolo real estate attorney. A recent decision out of Alameda County presents one such case, where the deed of trust required the lender to follow HUD servicing guidelines.

Foreclosure sacramento attorney.jpgIn Pfeifer v. Countrywide Homes, a mother and son obtained a $607,000 loan that was purchased by Countrywide. The mother was incompetent, and the son was her court appointed guardian ad litem. It was an FHA guaranteed loan. The standard FHA form Deed of Trust stated, in paragraph 9, which sets forth the “grounds for acceleration of debt.” It states:

“[l]ender may, except as limited by regulations issued by the Secretary, in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument… that the “[l]ender shall, if permitted by applicable law … and with the prior approval of the Secretary, require immediate payment in full of all sums secured by this Security Instrument ….” In subdivision (d), under the heading of “Regulations of HUD Secretary,” the agreement reads as follows: “In many circumstances regulations issued by the Secretary will limit Lender’s rights, in the case of payment defaults, to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.”

Continue reading
Published on:

by

In February I published a blog about a California court that would not take judicial notice of a document on a Federal Agency website. It dealt with the FDIC sale of Washington Mutual mortgage loan accounts to JP Morgan Chase. JPMorgan was conveyed all the assets, but none of the liabilities. That means that JPMorgan could foreclose, but the borrower could not make any claims against JP Morgan that they had against WaMu. In a recent court decision, a different court did take judicial notice of that same document on the website. The difference was due both the difference in the courts’ approaches, plus the borrowers’ attorneys’ arguments. A borrower or lender with questions about the different approaches should contact an experienced Sacramento real estate and business attorney, to be sure they do not get the same surprise.

sacramento real estate attorney judicial notice .jpg “Judicial notice” is the court’s recognition of the existence of a matter of law or fact without the necessity of formal proof. It can be described as a substitute for (formal) proof, a judicial shortcut, doing away with the formal necessity for evidence. Judicial notice is limited to matters which are indisputably true. A request for judicial notice can be defeated by showing the matter is reasonably subject to dispute. In California state court, Judicial Notice is limited by the evidence code, indicating matters which the court must take notice of, and matters which the court may take notice of. Federal Courts have a broader discretion as to what they may take judicial notice of.

In Michael D. Scott v. JPMorgan Chase Bank (2013 WL 1098436), the borrower had a $975,000 construction loan. Washington Mutual acquired the loan, was taken over by the FDIC, and JPMorgan acquired the loan, and foreclosed. Scott filed suit, making several claims against JPMorgan. JP Morgan claimed that it had not acquired WaMu’s liabilities along with the assets, and sought judicial notice of the Purchase and Assumption Agreement, as posted on the FDIC web site.

Continue reading